Editorial: Airline merger suffered unnecessary delays

Friday

Nov 15, 2013 at 12:01 AMNov 15, 2013 at 6:37 PM

A once cloudy forecast changed to clearer skies for the planned merger between American Airlines and US Airways when the U.S. Justice Department announced Tuesday that it would settle its antitrust suit against the two carriers.

The deal reached by the three parties, and accepted by six states that had opposed the merger, is a good one for the airlines, the cities they serve and for consumers, the group Attorney General Eric Holder said he was fighting to protect.

The proposed settlement, which calls for the new merged airline to give up numerous takeoff and landing slots at several major airports around the country, still has to be approved by a federal court in Washington, D.C. But on its face, the agreement would provide for more competition between airlines as it would allow more opportunity for low-cost carriers at some of the nation’s busiest airports. In North Carolina, Charlotte would remain a hub for what is now the world’s largest air carrier. The evolution of US Airways, lest we forget, includes its absorption of Piedmont Airlines way back when.

This merger, though, played out under the unwarranted meddling of the U.S. Department of Justice, which had previously looked blindly upon other airline mergers, but seemingly at random selected this one to block and developed an especially weak case, according to analysts.

After coming through several contentious union fights and a possible hostile takeover by US Airways before tough but fruitful negotiations resulted in a cooperative merger plan, American was ready for takeoff. But just as it was emerging from a two-year bankruptcy reorganization, with the merger seeming assured, the Justice Department filed its antitrust lawsuit against the two airlines.

The attorney general, in the face of other recent mergers that created large airline corporations, initially leveled a searing indictment against the airline industry as a whole. In charging that the new super companies had stifled competition, raised fares and generally acted in bad faith to the disadvantage of consumers, Holder seemed bent on making an example of the proposed American/US Airways union by squashing the deal.

When seven states and the District of Columbia joined the Justice Department in opposing the merger, many thought that the relentless Holder and his team had the upper hand. Perhaps they did, but it would be a case that would have to be made in court.

The trial was set to begin Nov. 25 after the judge refused to grant a Justice Department-requested delay until next year. Then late last month, when a mediator was appointed for a possible settlement, things began to appear more hopeful, especially as Holder hinted that an agreement — with concessions from the airlines — was a possibility.

There also were movements on other fronts supporting the two airlines. Mayors of seven large cities called on the attorney general to settle the lawsuit “and allow the combination to proceed.”

In addition, four airports where the two carriers have large footprints prepared briefs in support of the merger. Add to that list 183 members of Congress and 26 state and local chambers of commerce and it became clear the airlines were continuing to gain momentum.

That doesn’t mean they could have won in court. If the airlines lost there and the merger got scuttled, American and US Airways would have remained far behind United and Delta without any way to grow quickly.

In the end, the settlement was best for all. It avoids a courtroom battle which, with possible appeals, would have become an extended, expensive legal proposition that had the potential to do even greater harm to the airlines, the people they serve and the economies they help support. The minor concessions the new airline did offer will help keep smaller operations competitive and should have a small impact on travel fares.

But why did it take so long?

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